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Legal remedies to pursue when partnership contracts are breached

There are advantages and disadvantages of going into business with another person. On the one hand, you must share profits and losses. One the other hand, a partnership provides multiple ways of thinking, backgrounds, and personalities to serve the company best in any situation.

But what if your partner breaches the terms of your agreement? Must they face every ounce of your wrath? Well, maybe not.

Your best option is any one of the following four legal remedies, depending on circumstance.

Banishment

This sounds extreme, and rightfully so. Also, unless the initial contract states that expulsion is an option, it can't be pursued, unless you fully dissolve the partnership.

You must dissolve and rename the partnership without the liable party if it contains more than two members.

Sue

Pursuing litigation against the departed partner is two-fold.

You can attempt to sue if the partner, who you feel breached the contract, walked away from the partnership earlier than the agreement stated. Even so, the accused partner could avoid accountability if they can prove suitable cause for leaving the company.

A more severe breach, such as the mishandling of funds or documents, can be swiftly met with a lawsuit for compensatory damages.

Damage clauses

To add a level of partnership accountability, you could add a liquidated damages clause to your contract. This clause states that any partner negatively affected by a breach of contract has a claim to a set amount of money. Some instances could hinder a court from enforcing the liquidate damages clause, such as the dissolving of a partnership.

If the court doesn't uphold the clause, the judge may, at their choosing, award monetary funds to a wronged party. If you're chosen to receive funds, it's up to you to legally enforce the court's decision. Further ligation may be necessary if the correct party doesn't pay up.

Settlement

Settlement may be the most harmonious avenue to pursue, and the best option if you wish to continue the business relationship. Compromise is likely to reach a settlement agreement but is far-less time and money consuming than a legal battle.

Which option is best for your situation?

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